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A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next

A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a discount of 11% from the purchase price. Assume the product sells for $100.

a-1. Calculate the present value of the payments if you can borrow or lend funds at an interest rate of 8 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

a-2 Which is a better deal?

  • Installment plan

  • Pay in full

b-1. Calculate the present value if the payments on the 4-year installment plan do not start for a full year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b-2. Which is a better deal?

  • Installment plan

  • Pay in full

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